Should I Buy a Home Now or Wait?

For many people, owning a home represents the fulfillment of the American dream. It also serves as a valuable investment opportunity, with the property being the most significant asset for most homeowners. Naturally, determining the best time to buy a home in the Greater Philadelphia area and South Jersey involves navigating a complex interplay of fluctuating housing prices, mortgage rates, and economic trends.

Should I Buy a Home Now or Wait?

Trying to predict what’s going to happen in the financial markets is a hard task for even the most seasoned economists. That’s why home prices and sales often do well even in the face of rising mortgage rates. For many homebuyers, trying to guess when the best mortgage rates might be available takes a backseat to other considerations.

Why People Choose to Buy a Home Now Instead of Waiting

One of the biggest reasons people buy a home is for long-term investment potential, as well as the stability and control over their lives that it offers. Buying a home means you’ll be making monthly mortgage payments on a major investment, rather than the expense of paying rent. You also won’t have to worry about rent increases, landlord decisions, or the uncertainty that comes with renting a place to live.

Home Prices May Continue to Rise

Another key motivation for buying a home is the fear of missing out on an investment opportunity, especially when home prices are increasing. People fear that if they wait too long to buy a home, it could become unaffordable. They also don’t want to miss out on the investment opportunity of buying a home and watching it grow in value.

Even if mortgage rates rise, home prices in Philadelphia, South Jersey, and the surrounding Pennsylvania suburbs could continue to climb due to high demand and limited inventory. If housing prices in the Philadelphia area continue to rise, waiting to buy a home could make the cost of homeownership even higher in the future.

Locking in Equity Growth Now

Many people also decide that even if interest rates aren’t favorable, they won’t stay that way forever. They buy now with the idea that they could always refinance their mortgage later on when mortgage rates fall. They’d rather act now, so instead of paying rent, which offers no return on investment, they can start building wealth and equity by paying off a mortgage instead. Even if there was a slump in the housing market, they expect it to be temporary and for housing values to grow over the long term.

Avoid the Bidding Wars

When mortgage rates are low, it brings a surge in the housing market that can result in bidding wars and homes selling far above their asking price. When mortgages are high, there’s less demand for housing, which creates more of a buyer’s market. Some people prefer shopping for a home in such an environment, because it gives them a bit of negotiating power when bidding on a house.

They Start with an Adjustable Rate

One advantage that variable rate mortgages have over fixed-rate mortgages is they typically start with a lower introductory rate that will be fixed for a couple of years. If interest rates are lower when that introductory period ends, then their own rate will fall as well. If interest rates start to rise, they could always refinance and lock in a new rate. Another reason some people choose an adjustable rate is they want to lock in a lower interest rate and plan on selling their home before the introductory rate ends.

They Plan on Refinancing

While the housing market goes through an occasional slump now and then, owning a home is the ultimate long-term investment for many Americans. Interest rates, on the other hand, are always in a state of flux. Whether someone starts with a fixed rate or a variable rate mortgage, many homeowners always keep an eye on mortgage rates with the idea that at some point they could refinance to get a lower rate.

The “Perfect” Time Rarely Exists

Trying to find the optimal time to buy a home, when both mortgage rates and asking prices are at their lowest, is like guessing the best moment to purchase a stock or some other investment. Waiting for the perfect opportunity can often lead to missing out on the moment or losing the chance at the “ideal home.”

We’re Here to Help, Whenever You’re Ready

One of the most frequent questions that prospective homeowners ask us is: “Should I wait for mortgage rates to drop in Philadelphia?” We tell them the economy, the housing market, and mortgage rates can change dramatically without warning. That’s why for many prospective homeowners, the best time to buy a home in South Jersey and Greater Philadelphia comes down to when they can afford it, and they find the right place.

If you’re looking for mortgage and home buying advice in Greater Philadelphia, contact one of our loan officers to connect with a mortgage lender and discuss your options, and apply for a home loan.